First, I want to prove to the world that it’s possible to become financially independent at a relatively young age even if you don’t make a lot of money. I don’t make a six-figure income. I never have and I probably never will. But it’s not necessary. Often, people focus on income too much. Expenses are just as important, because if you make $200,000 per year, but spend $190,000 of it, you’ll never become financially independent. Conversely, bringing home $40,000, and learning to get by on half of it means you’ll likely be able to retire if you want to within 15 years or so. Making less means you have less to save, but spending less means you need less to retire off of.
The second reason I do this is because I want this to be a live look at one man’s journey. You can find countless books by financially successful people, but often it’s long after they’ve completed their trek to significant wealth that they’re then telling you how they did it. It’s easy to postulate. It’s much more difficult to actually show the whole process in action, for better or worse.
And finally, knowing that every dollar I spend is going to be published for the world to see serves as reinforcement to stay frugal. There’s been more than one occasion where I decided against a particular expense after realizing I might be a bit embarrassed to write about it.
So each month I will post my income and expenses for the previous month. I track every dollar in and out, so what you see is exactly what I earned and spent (rounded to the nearest dollar).
|Income from June 2014:|
|Day Job Paycheck||$1,127|
|Expenses from June 2014:|
|Rent & Utilities||$200|
*The everything else category includes expenses I don’t have a regular budget for. I spent $105 on documentation related to my automobile and residency here in Michigan. I applied for and received a Michigan driver license, registration, license plate, and title. I’m officially here!
First, income was astounding. I received what might be my last ever day job paycheck, as this check was related to sales that had closed during the month of May. Since I was paid on commission only, I would always receive my check a couple weeks after the prior month’s numbers had posted. So that’s it for that. I’m on my own from here.
Dividend income was impressive. I just continue to say that I’m so incredibly glad that the me of four years ago decided to make some big changes, seeing that the grind was just unsuitable and unsustainable for me. This income is the result of blood, sweat, and tears. Literally.
Online income, however, was really where it was at this month. This result would appear to make my recent post on how I make money online obsolete, but this is unusual for me. I would love it if every month were like this, but I don’t know if/when that will happen. More than half of this income was the result of increased freelance writing, and I also received an annual payment for certain syndicated content. In addition, June was a really strong month for passive ad income, which came in at $1,177. I expect online income to be strong again next month, but likely nowhere near this number.
Other income was related to $50 I received as a cash back reward on one of my credit cards (woo-hoo!) and an $8 refund from Comcast. I canceled my internet services in Florida before my billing cycle ended, so I received a small refund.
I made some key changes to the expense side of the budget. Namely, I added budgets for gifts, hosting, and email services. I spend enough on gifts that it should have its own budget category, no longer being included under the “everything else” budget. This month was quite high here as I spent a lot on my sister’s 30th birthday as well as Father’s Day. And I added hosting fees and email services to the budget for expenses related to the blog. I’ve been actually reducing the income side of the ledger by the amount of expenses incurred over the past few months to “net” out my income from online activities. But this really isn’t correct as it artificially inflates my savings rate. I was doing this because I didn’t want to track my dividend income against expenses that aren’t effectively part of my everyday personal life. However, as online income has grown, expenses have too. So I’m accounting for both income and expenses as they should be. Since I incorporate online income with personal dividend income then I will do the same with personal and business expenses.
The other expenses were pretty average. I held food in check this month, which is great. I’m targeting a $220 budget for all food, and I came extremely close to hitting this mark. And this even included taking my sister and brother-in-law out for food twice this past month, so I’m glad to be on track here.
Health insurance rose slightly for me. I had to cancel my previous HDHP, as it wasn’t valid in the state of Michigan. So I signed up for the national healthcare marketplace (I was able to because I moved and my previous plan isn’t valid) and enrolled in a Blue Care plan through BCBS, with a $5,950 deductible. This plan costs $173.75 after tax. So it’s actually fairly attractive compared to what I had before. About $40 more per month, but a much lower deductible. It was the cheapest plan I could possibly find, but it’s really not that horrible. My dental insurance was also invalid up here, so I canceled that too. I haven’t signed up for a new dental plan yet.
Auto insurance also went up, unfortunately. My insurance rate automatically increased just for moving to Michigan, which appears to have higher rates across the board when compared to Florida. In addition, I also upped my total liability to the max as you just never know. However, I signed up for the Progressive Snapshot program again, so I have that plugged in and I’m driving extra cautious. I’m hoping to snag a 20% discount or so in the coming months. We’ll see!
I paid $50 toward my student loans this month, which covered my interest expenses along with a little extra to pay down the principle. These loans are in forbearance for one more month, which basically just allows me a little flexibility in regards to cash flow. It looks like I didn’t really need it after all, but it’s nice to have that safety net.
The amusement tab was much higher than usual. I spent $43 on a used copy of Battlefield 4 that my brother-in-law was begging me to get so we could play online together. I occasionally play video games when I have free time, which isn’t often. But he’s pretty hardcore and plays this all the time. So I caved in. The rest was related to a night out on the town with my youngest sister and her boyfriend.
I managed to save 72.9% of my net income this month, which is simply fantastic. That’s my highest savings rate since August of last year. I’m incredibly happy any time I can get this rate over 70%. I expect this to probably be my last hurrah in this regard for the rest of the year, but I’m optimistic I can still come close to 50% on a regular basis. If I can still save almost half of my net income without a conventional day job I’ll be ecstatic!
My goal is to save 50% of my net income, averaged monthly. So far, I’ve hit rates of:
- 49.8% – January
- 21% – February
- 59.1% – March
- 51.6% – April
- 18.6% – May
- 72.9% – June
I’m now at an average of 45.5% for the year. That’s slightly behind my goal at the midway point, but I’m excited to give it my best shot and come from behind for a last-minute victory. We’ll see how it goes!
How did June treat you? Did the budget go to plan? Why or why not?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net